Quarry Operations and Property Values: Revisiting Old and Investigating New Empirical Evidence

Abstract

A large literature exists on the impact of disamenities, such as landfills and airports, on home prices. Less frequently analyzed is the effect of rock quarries on property values, and what little evidence is available is dated and conflicting. This question of price effects is a policy relevant one, with one study in particular used frequently to support “not in my backyard” campaigns against new quarry sites. In this policy paper, we revisit the literature and conduct a new analysis of the price effects of quarries, estimating the effect of quarries on home prices with data from four locations across the United States and a wide range of econometric specifications and robustness checks along with a variety of temporal circumstances from the lead-up to quarry installation to subsequent operational periods. We find no compelling statistical evidence that either the anticipation of, or the ongoing operation of, rock quarries negatively impact home prices. Our study likewise highlights a number of shortcomings in the empirical methodologies generally used to estimate the effect of disamenities on real estate prices. First and foremost, many existing studies are naive as to the empirical conditions necessary to identify a causal relationship and do not establish credible strategies to estimate the counter-factual outcome. Second, the inclusion of “distance to the site” regressors in hedonic models is shown to be an unreliable statistical method. Using the method of randomized inference, the null hypothesis of “no effect” of placebo quarries is rejected in as much as 93% of simulations.